![]() ![]() Let’s review some of its common causes: Changes in the Interest Rates What Causes Revaluation? Image source: Ī variety of factors can trigger currency revaluation. This type of regime is standard for most major economies. On the other hand, in a floating exchange rate system changes in the value of the currency are generated by market forces. They are common in developing economies that are looking to provide a stable system. In such regimes, the official value of the currency can be altered only via a decision by the country’s government. The former keeps the currency’s value within a narrow scope, and therefore provides more certainty to both exporters and importers. To better understand revaluation, the difference between fixed and floating exchange rate systems should be clarified as well. A country can regulate the exchange rate of its currency to a baseline of its choice, be it the price of gold, wage rates, or a foreign currency. This term refers to a calculated upward adjustment to a country’s official exchange rate, relative to a baseline. Now, let’s dive deeper into what currency revaluation is and what are its main drivers. Together with the expansion of foreign reserves, it has been strongly supporting the nation’s official currency. They are optimistic because the country’s exports increased rapidly, making a higher trade surplus. All of these factors have reassured Vietnam officials to target a GDP growth of 6 percent. Those who follow news about Vietnam are familiar with the relocation of manufacturing facilities from China which is expected to encourage economic growth despite the uncertainties that the COVID-19 pandemic has caused. expansionary monetary policy are predicted to keep the exchange rates of this exotic currency steady. The country’s economic recovery, the strengthening of the Chinese yuan, and the U.S. The Vietnamese dong is expected to remain strong in 2021. Today, Vietnam is a part of the globalized world market, and its export-oriented manufacturing and domestic demand are the main drivers of growth. The country has seen an influx of foreign investments since, its gross domestic product rose, while the core inflation remains low. With the U.S lifting the trade embargo and laxer governance by the Communist Government, economic prosperity has finally begun. Still, the country has managed to reduce poverty dramatically since then. The economic downturn affected the entire country so much that 70% of Vietnam’s citizens lived below the poverty line after the Vietnam war. It weakened the Vietnamese dong at the time, with inflation running at up to 900%. In fact, the cycle of inflation lasted from 1985 until the mid-nineties. Vietnam struggled with a declining economy for a long time. The country’s officials decided to replace the cotton notes that were used until then with plastic polymer ones to combat counterfeiters. The last series of the notes entered the market in 2003. Multiple variations of the dong existed until the unified dong was introduced in 1978, following communist victory and the unification of Vietnam. Prior to this, South Vietnam was also dominated by piastre notes. This currency entered the South area six years later, in 1953. To better understand the changes in the value of the Vietnamese currency, let’s start with the basics before we deal with some Vietnamese dong rv news and get more in-depth about this exotic currency. This rise in interest was encouraged by the country’s recovering economy, and more tourists exploring this beautiful, budget-friendly country. Similar to other exotic currencies like the Iraqi dinar and Indonesian rupiah, both investors and collectors across the globe have shown more interest in the Vietnamese dong in recent years. Such estimates of a future trend are difficult to predict, as we can’t tell the future and the best we can do is make educated guesses.Īlso, there are many factors in play that affect exchange rates and a currency’s value, such as a country’s economic performance, the prospect of inflation, capital flows, and plenty of others. Will the Vietnamese Dong be Revalued Soon? | Forecasting the value of any given currency is a challenging task that often results in unreliable predictions. ![]()
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